Is Early Childhood Education An Investment In The Future Or A Giant Waste Of Money?

Advocates
of early childhood education--programs like Head Start--often
claim that the social benefits so far outweigh the costs that
money budgeted for such programs should be considered an
investment in the future rather than ordinary government
spending.

But are those benefits real? It's almost impossible to measure
such things in the abstract. Studies that show the benefits or
lack thereof tend to be riddled with questionable assumptions or
methodological programs. And so far very little effort has gone
in to harnessing our usual market based methods to predict future
returns.

Mike Mandel over at Business Week notes that Congressman
Jared Polis wants to do exactly that: encourage private
investment in early education by creating some kind of investment
security.

Polis, with a long history as an entrepreneur and an education
supporter, was discussing ways to get the private sector to
invest in desirable social goods, such as early childhood
education. His point (broadly interpreted by me) was that there
is a systematic market failure: Even if the social return on
investment in early childhood education is high, as the data
seems to show, there’s no way for private investors to take
advantage of these opportunities.

In particular, the data seems to show that improving early
childhood education seems to reduce a wide variety of government
expenses, including crime and prisons. Polis suggested creating
securities where private investors could put money into early
childhood education, and at some point in the future get a share
of the cost savings. In the language of economics, he’d create
private property rights in future tangible fiscal benefits from
social investment (my words, not his).

It's not clear how exactly this would work. Would it create a
claim on the future income of the students of early childhood
education programs? A tax credit for the budget savings from
reduced expenditures for things like welfare and jail? There
seems to be a serious danger that the same problems in measuring
tangible benefits from hearly childhood education would apply to
measuring the payoffs from private investment.

But let's suppose we could accurately gauge the return with Head
Start Securities. Would this result in more private funding for
early childhood education? Charles Murray thinks it wouldn't. In
fact, it would likely reveal that such programs are tremendous
wastes of money. He likes the idea of the securities for
precisely this reason, calling it a "great idea" for "blowing the
claims for early childhood intervention out of the water."

"I think we all ought to get behind this idea, and thereby prompt
some unsentimental hedge-fund guys to take a hard look at the
claimed returns for early childhood intervention and the data
that are being used to support those claims," Murray writes. "I predict
their technical conclusion will be 'You can’t be serious.' Maybe
someone will pay attention to them."